Auto Dealership Buy/Sell Market Defies Interest Rates with Record-Setting Activity and Historically High Valuations Supported by Dealer Liquidity

First half 2023 buy/sell activity increased 26% compared to first half of 2022, resulting in a record 418 completed transactions over a trailing twelve-month period; market on track for a record year driven by resilience of auto retail profits and the strength of the dealership balance sheets, according to the Second Quarter 2023 Blue Sky Report® by Kerrigan Advisors

INCLINE VILLAGE, NV – September 5, 2023 –The auto dealership buy/sell market continues to gain momentum toward a record-breaking year, with 211 transactions completed in the first half of 2023, representing 357 franchises. As reported in the just-released Blue Sky Report® by Kerrigan Advisors, the mid-year 2023 results mean that buy/sell activity has increased 26% since 2022, a rate that exceeds the typical full-year results pre-Covid. There have been a record 418 transactions completed on a trailing 12-month basis, 9% higher than the prior full-year record (2021). 

“This rate of activity in the first half of the year is evidence that the consolidation of auto retail continues unfazed by rising interest rates and economic headwinds,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “More sellers are considering going to market and are requesting valuations to lock in today’s historically high blue sky.”

Kerrigan Advisors’ first annual OEM survey, released in August, found that auto retail’s robust position was in part due to improved inventory efficiency and higher earnings. Executives surveyed expected recent inventory turn rates to continue as a “new normal” of 30 to 60 days of vehicle inventory on dealership lots, far below the prior norm of 60 to 90 days or more. Furthermore, the survey found that 90% of OEM executives do not expect the industry to return to pre-Covid gross profit margins on new vehicles.

According to the Blue Sky Report, dealership earnings remain 3-times higher than the pre-pandemic period, despite declining ~20% since their peak in 2022. Over the last three quarters, the US public dealer groups’ net income has risen 9.5%, due to a 74% increase in profit margins since 2019 and a 33% increase in dealership count. This, along with strong blue sky values, has led to well-capitalized buyers — especially in fast-growing, business-friendly states such as Texas, Florida, South Carolina, North Carolina, Georgia and Arizona. These buyers are thinking big: year-to-date there were 69 multi-dealership transactions in the first half of 2023, representing 33% of the buy/sell market.  

“We are seeing a tremendous amount of interest in top dealership groups in growing markets, like our recent sale of MCE Automotive Group in Greenville, South Carolina – one of the fastest growing markets in the Southeast,” said Kerrigan. “We expect more sizable transactions in growth markets this year, as buyers seek to increase their exposure to expanding population centers and consolidate their regional presence, which is what AutoNation did in purchasing our client the Bob Baker Auto Group in Carlsbad, California.”

The first half of 2023 also saw a significant shift to domestic franchises, making up 58% of the buy/sell market — a 19% increase compared to the full year of 2022. Kerrigan Advisors attributes this move to anticipated changes to the dealership business model, particularly with the aggressive rollout of electric vehicles (EV). According to Kerrigan Advisors’ 2022 Dealer Survey, over 40% of dealers surveyed felt that the majority of domestic franchises would see reduced profitability because of their EV strategies. Despite this, domestics remain underrepresented in the buy/sell market relative to their 66% share of total franchises in the US.

“Many dealers are sensitive to the changing auto retail landscape, and that’s spurring them to seek assistance from our firm to understand what their blue sky value is in today’s fluctuating auto retail market,” said Kerrigan. “Some dealers lack a reliable succession plan and are nearing retirement; most see changes to auto retail as potentially detrimental to their business model, which is prompting more kitchen table discussions around a possible sale.” 

Kerrigan Advisors’ OEM survey supports some of these concerns. Executives surveyed indicated they did not expect EVs to be sold through the negotiated pricing model; 20% expected EVs to be non-negotiable in price and 48% thought some portion of EV sales would include a set pricing model. In addition, 22% of executives surveyed believe the agency sales model will come to the US, with 43% unsure. While Kerrigan concludes that none of these changes are necessarily negative for future profitability, they are significant and will require dealerships to continuously adjust their business model to maintain and grow profits. For some dealers and their offspring, the unknown associated with the future auto retail model is enough for them to decide the time is right to consider a sale.

2023 Buy/Sell Trends

For the second quarter of 2023, Kerrigan Advisors identified the following trends that are expected to impact the buy/sell market for the remainder of the year:

·       Higher interest rates have minimal impact on blue sky values

·       An increasing number of dealers assess business value in consideration of a sale

·       High-levels of key employee compensation increasingly challenges buyers’ proformas

Since March 2022, the Federal Reserve raised interest rates 10 times, resulting in a correlated rise in borrowing costs for dealers and consumers. As such, growing dealership groups are facing higher financing costs and more conservative lending terms on acquisition loans and mortgages, particularly since the failure of Silicon Valley Bank. Interestingly, despite the disruption in the lending community and higher interest rates, the expected concomitant decline in blue sky values and multiples has yet to occur: publics’ blue sky multiples have increased 20% since the first quarter of 2022.

“Rising interest rates usually have a direct negative impact on equity values, including franchise blue sky,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “We think the valuation aberration experienced today is due is the unexpected strength of the industry’s financial performance, especially auto retail’s higher profit margins. This shows the strength and resilience of the dealership business model.”

In addition to the auto retail industry’s strong record of profitability, additional factors such as pent-up consumer demand and newfound OEM inventory discipline are outweighing affordability issues related to rising interest rates. These rising financing costs are not impacting blue sky values because of the strength of the industry’s balance sheet. Auto retail has amassed an estimated $200 billion in pre-tax profits since 2019, because of years of record earnings. Many buyers can, and will, pay for acquisitions with their own capital and not tap into the debt markets for financings, reducing the impact of rising borrowing costs on blue sky values.

Kia and Cadillac Low-End Multiple Upgraded; Cadillac and Honda Outlook Moves to Steady

Kerrigan Advisors raised Kia’s low-end multiple by 0.25, resulting in a revised multiple range of 4.25 to 5.25, and increased Cadillac’s low-end multiple by 0.50, for a new multiple range of 3.00 to 3.50. Said Ryan Kerrigan, Managing Director of Kerrigan Advisors: “Buyer demand for the Kia franchise continues to rise. Kia franchises often trade above our published multiples due to the franchise’s impressive market share in the fastest-growing markets. A key to Kia’s sustained success is that dealer/OEM relations are highly positive, consistently ranking among the top 10 in NADA’s Dealer Attitude Survey.” Kia’s multiple outlook remains positive.

Kerrigan Advisors sees rising buyer interest in Cadillac, as sales per franchise improves, particularly for exclusive dealerships. Cadillac has augmented inventory management 49%, per its inventory efficiency rating by Cloud Theory as of June 2023 — the most of any franchise. Cadillac now ranks 7th among all franchises for inventory turn rates. As a result, Kerrigan Advisors is increasing Cadillac’s blue sky multiple and moving its multiple outlook to steady as the firm continues to monitor the brand’s EV rollout. In addition to changes to Cadillac and Kia, Kerrigan Advisors moved Honda’s multiple outlook to steady from negative after a 23% increase in sales through the first half of 2023. “Honda’s improvement in new vehicle sales, should it continue, could result in a positive outlook for Honda’s blue sky multiple in future quarters,” said Ryan Kerrigan.

Highlights from the Second Quarter 2023 Blue Sky Report® by Kerrigan Advisors include:

·       211 buy/sell transactions were completed through the first half of the year representing 357 franchises, a 26% increase for transactions and 24% increase for franchises sold from the first half of 2022.

·       69 multi-dealership transactions were completed in the first half of 2023, representing 33% of the buy/sell market.

·       58% of 2023’s buy/sell market was domestic franchises, a 19% increase from the full year of 2022.

·       Through the first half of 2023, the US public dealer groups’ new vehicle gross profit margins are 149% higher than pre-Covid levels.

·       Ford has the highest buy/sell market share at 14.8%, largely due to dealers’ concerns over the OEM’s rollout of electric vehicles and potential resulting changes to the business model.

·       92% of the franchises sold in the first half of 2023 were to private buyers who are leading industry consolidation. The largest private groups represented 20% of the buy/sell market, while smaller private groups remained the largest buyers pool at 72%. The US public dealer groups acquired 8% of franchises sold in the first half of 2023.

·       The US public dealer groups’ estimated blended average blue sky multiple has increased 59% in the last four quarters to 4.6x. This is largely due to a 48% uptick in The Kerrigan Index™ since October 2022.

·       Kerrigan Advisors estimates the average dealership group with three dealerships is worth $39 million in blue sky, double the level pre-pandemic.

·       US public dealer groups’ net income has risen 9.5% over the last three quarters, remaining three times higher than 2019.

·       Over 60% of OEM executives expect a new normal of 30-to-60-day inventory turn rates, according to Kerrigan Advisors’ 2023 OEM Survey; improved inventory management is expected to support higher new vehicle gross margins in the near term.

·       90% of OEM executives do not anticipate a return to pre-Covid inventory levels, according to the Kerrigan Advisors’ 2023 OEM Survey.

·       22% of executives surveyed believe the agency sales model will come to the US, with 43% unsure, according to the Kerrigan Advisors’ 2023 OEM Survey.   

·       Since the pandemic, average dealership payroll per employee has risen 46%, which is contributing to challenges in buy/sells as buyers balance their acquisition’s proforma and employee retention post-transaction.

The Blue Sky Report®, published by Kerrigan Advisors, is the auto retail industry's most comprehensive and authoritative quarterly report on dealership M&A activity, as well as franchise values. The quarterly report, received by over 11,000 industry recipients in 35 countries, includes analysis of all dealership transaction activity for the year, and lays out the high, average and low blue sky multiples for each franchise in the luxury and non-luxury segments. For more details and to preview the report, click here. To sign up to receive the quarterly report, click here.

Kerrigan Advisors also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here.

About Kerrigan Advisors 

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers in the US. The firm advises auto dealers nationwide, enhancing value through the lifecycle of growing, operating, and monetizing their businesses. Since the firm’s founding, Kerrigan Advisors has had the honor of representing the industry’s largest transactions, including more Top 150 Dealership Groups than any other firm in the industry. Led by a team of veteran industry experts, the firm does not take listings, rather Kerrigan Advisors develops a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital raising services, the firm also provides a suite of consulting services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors publishes The Blue Sky Report®, which is the auto industry's most comprehensive and authoritative quarterly report of dealership buy/sell activity and franchise values, received by over 11,000 industry participants in 35 countries. To register to receive The Blue Sky Report®, click here. Kerrigan Advisors also publishes The Kerrigan Index™, the only monthly report tracking the seven publicly traded auto retail companies. To access The Kerrigan Index™, click here.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Sale of seven dealerships underscores strong buyer demand for growth markets like South Carolina, one of the top 10 markets requested in Kerrigan Advisors’ proprietary Buyer Database

Greeneville, SC – August 23, 2023 – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Greenville, South Carolina-based MCE Automotive Group, owned and operated by the Escude family, in the sale of their seven dealerships to North Carolina-based Anderson Automotive Group, ranked 71st largest US dealership group in the US by 2022 new unit sales. The transaction includes Toyota of Greer, Kia of Greenville, Kia of Greer, Hyundai of Greer, Genesis of Greer, Nissan of Greer and Mike Hovart Chevrolet and represents nearly $500 million in revenue. This marks the 200th dealership sale led by Kerrigan Advisors since 2015 and the 22nd Toyota dealership sold, making Kerrigan Advisors the most active sell-side advisor to Toyota dealers in the US.  With the sale of MCE Automotive Group, Kerrigan Advisors has completed transactions representing over $4 billion in client proceeds since 2020.

“It was a true honor to represent the Escude family in the sale of their highly valuable, premier dealerships in the thriving Greenville, South Carolina market. The MCE transaction is indicative of the tremendous demand for dealerships located in South Carolina, one of the top 10 markets requested by buyers,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “The Escude family’s dealerships, anchored by the best import franchises - Toyota, Kia, and Hyundai - represent some of the highest volume franchises in the Greenville market and are housed in state-of-the-art facilities. We are so pleased to see these sought-after dealerships transfer to another multi-generation Carolina family, ensuring the Escude’s legacy of top customer service and community engagement lives on in Greenville.”

Greenville serves as the economic anchor of Upstate South Carolina, with over 60% of the Upstate population residing in an area that touts a low cost of living and a high quality of life (#2 Best Place to Live in the state and #15 Lowest Cost Place to Live in the US). It is one of the three largest metro areas in South Carolina and has the fastest growing population (67% rise in population since 2000). MCE Automotive Group captures 14% market share of Greenville’s new units sold, with a 45% share in Greer, a thriving Greenville suburb. The sale includes seven recently built or renovated dealerships, and over 39 acres of property. The dealerships operate in three Greenville markets: Greer (Toyota, Hyundai, Kia, Nissan, and Genesis), Greenville (Kia), and Easley (Chevrolet). MCE Automotive is also the exclusive Kia dealer for the Greenville MSA.

“Toyota, Kia and Hyundai are some of the industry’s strongest import brands, with the highest valuation growth expectations according to our recent Dealer Survey,” continued Erin Kerrigan. “Not surprisingly, there was tremendous buyer demand for the MCE Automotive Group, given the group’s tremendous financial performance and the fact that MCE is anchored by top import franchises.” Kerrigan noted that since 2019, the valuation expectations for Kia and Hyundai have shifted upward over 26 percentage points, while Toyota, the most valuable non-luxury import franchise, continues to outperform most franchises in valuation growth expectations.

“As a family, we’re forever grateful to our employees and the community of Greenville for choosing our dealerships. For us it’s always been about taking care of our customers and employees, as well as being good stewards of our resources on behalf of the community,” said Mark Escude, Sr., President of MCE Automotive Group. “Whether through our lasting commitment to the March of Dimes, or our investment in local charities, we care about the people of Greenville. This is why our choice of Kerrigan Advisors to manage our sale process and achieve our goals in a transaction was so important to me and my family. Only Kerrigan has the deep knowledge and expertise to identify the right buyers for the largest groups in the industry along with the proven track record to ensure the sale goes smoothly and is run professionally.”

“In choosing Kerrigan Advisors, we knew we were in good hands,” continued Escude. “The Kerrigan team, particularly Mercedes Hendricks and Marie Brashears, went above and beyond when managing the sale process, from accurately reflecting our historical earnings to overseeing the buyer’s due diligence process and the closing. Erin Kerrigan’s personal relationships with top OEM executives also ensured our sale process ran on schedule, even with seven required OEM approvals. We are very grateful for the thoughtful advice and hard work of the entire Kerrigan team to ensure our sale was a tremendous success.”

“We were proud to advise the Escude family with this complex transaction,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “Greenville, South Carolina is a dynamic market with an increasing population, driven by a high quality of life and low cost of living, making MCE highly desirable. Our data, and the trends we are seeing, demonstrate the Carolinas are one of the top areas for growing dealership groups, resulting in price premiums. This transaction proved out that trend.”  

Kerrigan Advisors has facilitated 28 multi-dealership transactions since 2020, making the firm the most active sell-side advisor on larger, more complex transactions in the auto retail industry. The firm attributes its success to the team’s laser focus on fulfilling each client’s personal and professional goals, as well as their commitment to managing every step of the transaction through closing. In addition to its sell-side advisory work, the firm offers strategic consulting services to dealers and their families, including growth planning, capital raising, and acquisition valuation analysis, creating value for clients at every stage of the auto retail lifecycle.

For MCE Automotive Group, Sai Ireland and Barry Cannada of Butler Snow LLP served as legal counsel and John Bishop Jr. of Bishop and Draper, CPAs was MCE’s accountant. For the buyer, Jeff Roberts of Underwood & Roberts, PLLC served as legal counsel and Travis Horton of Henderson Hutcherson & McCullough, PLLC was Anderson’s accountant.

About Kerrigan Advisors

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers nationwide. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Kerrigan Advisors has represented some of auto retail’s largest transactions and advised more of the largest dealership groups in the US than any other buy/sell firm in the industry. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, the firm does not take listings, rather they develop a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital raising services, the firm also provides a suite of consulting services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2023 Kerrigan OEM Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Majority of Automakers Expect New Vehicle Gross Margins to Remain Above Pre-Covid Levels, Though Dealership Profits Are Projected to Decline

New survey from Kerrigan Advisors reveals that OEMs are looking at a new normal when it comes to dealership profitability, lower inventory levels and more OEM involvement in pricing; 68% expect some form of non-negotiable pricing to be part of future EV retail model

Incline Village, NV – August 7, 2023 – Dealership new vehicle gross margins to remain above pre-Covid levels say 90% of automotive OEMS, according to the just-released annual Kerrigan OEM Survey, but the majority believe dealership earnings will still decline over the next 12 months. The survey, gathered from Kerrigan Advisors’ annual survey of automotive OEM executives in conjunction with the issuance of The Blue Sky Report®, indicates that automakers are looking at a ‘new normal’ when it comes to dealership profitability, inventory levels and customer data sharing. The survey also offers a window into how OEMs view the future of electric vehicle pricing, with 68% expecting some change to pricing methodology.

“This survey was designed to gauge OEM executives’ perspectives on the franchise system, dealer profitability and expected changes to the retail model with the rollout of new drivetrains. It offers an important window into the perspectives of OEM executives whose views are not often shared publicly in the industry,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “The results also demonstrate the value OEM executives place in their dealer networks, even as the auto retail model evolves.”

Profits and Days Supply

While only seven percent of OEMs surveyed expect dealership profits to increase in the next 12 months, three-out-of-four expect new car margins to land somewhere between current and pre-Covid levels. This view is supported by the fact that respondents expect inventory levels to remain low, with 59% expecting days’ supply of 30 days over the next 12 months, and 82% expecting the ‘new normal’ for days’ supply will remain lower than pre-pandemic averages.

EV Pricing Model

A key OEM/dealership relationship issue addressed by the survey is the future pricing model for electric vehicles, which revealed that nearly one-half (48%) believe some form of non-negotiable pricing will be a part of the retail model of the future, with 20% expecting non-negotiable pricing to be the exclusive means for selling electric vehicles. Only 32% of respondents believe the traditional MSRP pricing model will continue for electric vehicles.

“The data on EV pricing was enlightening, as was data that showed few see the much-discussed EV agency model coming to the US, with just 22% projecting that change, likely due to the strength of state franchise laws in the US,” continued Erin Kerrigan. “The OEM/dealer relationship will continue to evolve as electric vehicles gain market share and alternative retailing models, such as the agency model, are tested. While there will be inevitable conflict, Kerrigan Advisors believes the relationship between the OEMs and their dealers is largely on solid ground and well positioned to manage the evolution of US auto retail.”

Customer Data and Real Estate

Another key topic related to the evolving retail model investigated by the survey is customer data and relationship retention, with the majority of OEMs (66%) expecting both the dealer and OEMs to share the customer data over the next five years, a change from the past when dealers almost exclusively owned the customer data and relationship.  

With regard to dealership real estate, the survey reveals that the majority of OEM executive respondents predict facility requirements will either stay the same (52%) or increase (32%), which is surprising given their expectation for reduced inventory and likely fewer employees with a more streamlined, non-negotiable sales process.

“The results of the 2023 Kerrigan OEM Survey are indicative of a business model that is in transition, with OEM views that are not always internally consistent with their proposed retailing changes which are clearly evolving as more data becomes available,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “While OEMs and dealers will definitely have differing views on the path forward for electric vehicles, customer data and facility requirements, for the most part, OEMs expect the dealer to remain a key and profitable piece of the auto retail puzzle.”

Key Survey Data

·       69% expect dealership profitability to decline in the next 12 months, while 31% project profits will stay the same or increase. 

·       10% believe new car margins will return to pre-Covid levels, while 74% expect them to settle between pre-Covid and current levels in the next 12 months. 16% of respondents project high margins will continue through 2023.  

·       59% project days’ supply to be 30 days in the next 12 months; just 3% project a rate of 90 days or more.

·       60% expect the ‘new normal’ for new vehicle days’ supply to settle in at 30 to 60 days, below the pre-Covid average of 60 to 90 days.

·       68% believe some form of non-negotiable pricing will be a part of the retail model of the future with 20% expecting it to be the exclusive means for selling electric vehicles. Only 32% believe the traditional MSRP pricing model will continue for electric vehicles.

·       35% do not believe an agency model will materialize in the US auto retail marketplace, while 43% remain unsure and 22% think it will be introduced to the US in the next five years.

·       66% believe the customer relationship/data will be owned both by the OEM and dealer in five years. 16% expect the OEMs to have exclusive ownership, while 17% believe the dealer will.

·       52% believe facility requirements will largely remain the same over the next 5 years. 32% believe facility requirements will increase and 16% anticipate a decrease. 

To download the full 2023 Kerrigan OEM Survey results, click here.

Methodology

The data for The Kerrigan OEM Survey was gathered from Kerrigan Advisors’ annual survey of automotive OEM executives in conjunction with the issuance of The Blue Sky Report®. The Kerrigan OEM Survey is based on over 115 responses from OEM executives in Kerrigan Advisors’ proprietary database. Responses were collected from December 2022 to May 2023.

About Kerrigan Advisors

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers nationwide. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Kerrigan Advisors has represented on some of auto retail’s largest transactions and advised on the sale of more top 150 Dealership Groups, than any other buy/sell firm in the industry. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, the firm does not take listings, rather they develop a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital raising services, the firm also provides a suite of consulting services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors publishes The Blue Sky Report®, which is the auto industry’s most comprehensive and authoritative quarterly report of dealership buy/sell activity and franchise values, received by over 11,000 industry participants in 35 countries. To register to receive The Blue Sky Report®, click here. Kerrigan Advisors also publishes The Kerrigan Index™, the only monthly report tracking the seven publicly traded auto retail companies. To access The Kerrigan Index™, click here.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Sale of Houston area Kia dealership highlights the strength of the Kia brand in a large and high-growth metro area; the transaction marks Kerrigan Advisors’ 7th dealership sale in Texas in 2023

Houston, TX – June 7, 2023 – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Houston, Texas-based Beck & Masten Auto Group in the sale of Beck & Masten Kia to Houston, Texas-based Group 1 Automotive (NYSE: GPI). This marks the 187th dealership sale transaction led by Kerrigan Advisors since 2015, and 11th Kia dealership sold.

The sale underscores the emerging power of the Kia brand in fast-growing, business-friendly markets like Texas. Beck & Masten Kia is ideally located in Tomball, a northwest Houston suburb adjacent to the fast-growing and affluent Woodlands area.

“Beck & Masten Kia’s success represents a compelling example of Kia’s tremendous accomplishments in recent years and the rising value of the franchise, particularly in large and growing metro areas, such as Houston,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “The brand has grown market share 39% in the US since 2019, more than any other non-luxury franchise and its sales per franchise now surpass Honda, Subaru and Hyundai. Not surprisingly, buyer demand for the franchise has skyrocketed as evidenced in this transaction.”

According to the 2022 Kerrigan Advisors’ Dealer Survey, Kia had the highest expected valuation gain of all franchises: close to half (46%) of dealers surveyed expected the franchise to increase in value, surpassing Toyota and Hyundai for the first time. “We expect buyer demand for Kia franchises to grow throughout 2023, thanks to strong satisfaction among dealers, a refreshed lineup of vehicles, and the return of customer incentives as inventory increases,” continued Erin Kerrigan.

Owners John Beck and James Masten began their association in 1971, selling cars together at a local Chevrolet dealership. That partnership would eventually expand into ownership, first with a wholesale company, and, over the years, a long list of successful dealerships. Over the last four decades, Beck & Masten Auto Group has been honored with Dealer of the Year Awards, Mark of Excellence Awards, and more — all thanks to their focus on premier customer service and excellent employee relations.

“The success of Kia in greater Houston shows how the area has grown, along with the value of the franchise,” said James Masten, co-owner of Beck & Masten Auto Group. “With Kia, we saw an opportunity to invest in the brand and grow its footprint, for both new car sales and fixed operations. So, when it came time to sell it was incredibly important to find a buyer who could continue to invest in and nurture this emerging brand. This is why we turned to Kerrigan Advisors who has the experience and know-how, in both the Texas market and with Kia, to complete a transaction as important as this one.”

“It’s hard enough to sell a dealership that has a proven track record over decades of sales and service, but when a dealership is beginning to grow into its revenue potential like our Kia dealership, that’s even more complicated,” said John Beck, co-owner of Beck & Masten Auto Group. “Add to that the changing dynamics of the Texas automotive market — especially it’s incredible growth — and it was clear to us that Kerrigan Advisors was the only sell-side advisor with the expertise to make this transaction a success for all involved.”

Texas is the 2nd largest auto retail market in the nation, representing 9% of total US light vehicle sales. It is also among the most attractive to franchise buyers due to the state’s high sales per rooftop (6th highest in the nation) and 41% increase in light vehicle registrations since 2001.

“It was a pleasure to represent John Beck and James Masten in this transaction. Just as they did with their large Buick GMC stores, they successfully built the Kia franchise in northwest Houston,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “This project underlines the tremendous strides that Kia has made with respect to product line, brand, and penetration of the American heartland. Kia is now squarely on the map as a desirable franchise throughout the United States.”

Kerrigan Advisors has sold seven dealerships in Texas in 2023, making the firm the most active advisor in the state, as well as the most active sell-side advisor on larger transactions in the auto retail industry. The firm attributes its success to its team’s laser-focus on fulfilling each client’s personal and professional goals. In addition to its sell-side advisory work, the firm offers strategic consulting services to dealers and their families, including growth planning, capital raising, and acquisition valuation analysis, creating value for their clients at every stage of the auto retail lifecycle.

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2022 Kerrigan Dealer Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

About Kerrigan Advisors

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers nationwide. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Kerrigan Advisors has represented some of auto retail’s largest transactions and advised more of the largest dealership groups in the US than any other buy/sell firm in the industry. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, the firm does not take listings, rather they develop a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital raising services, the firm also provides a suite of consulting services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Sale of Texas Buick GMC dealerships highlights strong demand for top volume franchises in states with favorable business environments and marks Kerrigan Advisors’6th dealership sale in Texas in 2023

Incline Village, NV – May 12, 2023 – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Houston, Texas-based Beck & Masten Auto Group in the sale of Beck & Masten Buick GMC North, Buick GMC South and Buick GMC Coastal Bend to Houston, Texas-based Group 1 Automotive (NYSE: GPI). This marks the 184th, 185th and 186th dealership sale transaction led by Kerrigan Advisors since 2015. Beck & Masten is a dominant auto group in Houston and Corpus Christi, retailing more than 11,700 vehicles in 2022 and representing more than one third of Buick GMC sales in the Houston MSA. The dealerships are amongst the highest volume Buick GMC franchises in Texas and the US, ranking as the #1 Buick GMC dealer in Texas for 22 consecutive years and the #1 Buick GMC dealer in the US six times.

Owners John Beck and James Masten first met at a Houston Chevrolet dealership in 1971, and subsequently partnered to start a successful wholesale company. Eight years later, the pair purchased Pontiac GMC in Tomball, Texas. The dealership was eventually relocated to Houston and is now called Beck & Masten Buick GMC North. The dealership has since won the Dealer of the Year Award 13 times from General Motors, a recognition of its decades-long accomplishment as one of the highest volume Buick GMC dealerships in the country. The success of Beck & Masten Buick GMC North brought about Beck & Masten Buick GMC South in 2000, which also grew into one of the top-performing domestic dealerships in Houston and Texas. Buick GMC South has been recognized with multiple Mark of Excellence and Dealer of the Year awards — success that has come about due to their focus on premier customer service and excellent employee relations.

“Beck & Masten has been an important auto retailer in the Houston market for decades, and we were honored to represent John Beck and James Masten, as well as their families, in this big decision,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “They've been partners for 50 years, and built very impressive market share for Buick GMC in the region. Group 1 Automotive has added a substantial domestic group to their Houston platform.”

“John and I have spent the majority of our adult lives building this business, and the decision to retire was a huge one for us,” said James Masten, co-owner of Beck & Masten Auto Group. “It was incredibly important that this be done right, for my family and for the families of our employees. I knew we needed to go with the best in the industry when it came to representing our sale, and it did not take long to figure out that Kerrigan Advisors was the best. When it comes to getting big transactions done, they have the most experience. They guided us along the way and led us to a great outcome.”

“We have spent our careers building dealerships, not selling them. James and I wanted an advisor exclusively focused on selling dealerships like ours,” said John Beck, co-owner of Beck & Masten Auto Group. “It's been a real pleasure to work with the professionals at Kerrigan Advisors throughout the sale process. We needed their guidance, and they expertly gave it to our families throughout the transaction process ensuring the sale was a success for all involved.” 

“We always appreciate the opportunity to work with leading Texas dealers like Beck & Masten,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “This transaction demonstrates that the Texas market is one of the best in the country. There is incredible buyer demand for top volume franchises in the Lone Star State, given its highly favorable business climate, population growth and quality of life. We expect to see a disproportionate share of the 2023 US buy/sell market take place in Texas.”

Texas is the 2nd largest auto retail market in the nation, representing 9% of total US light vehicle sales. It is also among the most attractive to franchise buyers due to the state’s high sales per rooftop (6th highest in the nation) and 41% increase in light vehicle registrations since 2001. Notably, Beck & Masten’s three Buick GMC dealerships have an 8% market share for Buick GMC sales in Texas.

Kerrigan Advisors has sold six dealerships in Texas in 2023, making the firm the most active advisor in the state, as well as the most active sell-side advisor on larger transactions in the auto retail industry. The firm attributes its success to its team’s laser-focus on fulfilling each client’s personal and professional goals. In addition to its sell-side advisory work, the firm offers strategic consulting services to dealers and their families, including growth planning, capital raising and valuation analysis, creating value at every stage of the auto retail lifecycle. 

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2022 Kerrigan Dealer Survey, click here (https://www.kerriganadvisors.com/the-kerrigan-dealer-survey/). Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

About Kerrigan Advisors

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers nationwide. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Kerrigan Advisors has represented some of auto retail’s largest transactions and advised more of the largest dealership groups in the US than any other buy/sell firm in the industry. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, the firm does not take listings, rather they develop a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital raising services, the firm also provides a suite of consulting services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Kansas City luxury dealership sold to Baxter Auto Group; Transaction marks 183rd dealership sold since 2015 by Kerrigan Advisors, the premier sell-side dealership advisor to top luxury dealerships in growth markets

INCLINE VILLAGE, NV – May 9, 2023 – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Holman, a global automotive services organization, in its sale of Audi Shawnee Mission to Omaha, Nebraska-based Baxter Auto Group. The dealership, newly built in 2016, is the highest volume Audi dealership in the Kansas City MSA, a growing market with a strong economy and a highly educated workforce. It is also the 5th highest volume luxury dealership in the greater Kansas City metro area.

“We were honored to assist Holman in the strategic sale of its Audi franchise in Kansas City,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “Knowing Holman’s commitment to community, creating a positive workplace and providing exceptional customer service, it was essential to identify a buyer that shared these key values. We found that in Baxter Auto Group who proved to be the perfect fit.”

For nearly a century, Holman has applied a standard of excellence to its business, growing from a single Ford dealership in 1924 into the 26th largest dealership group by 2022 new unit sales in the United States. Today, Holman owns twenty eight dealerships in eight states under twenty brands and six major divisions in the U.S., Canada, the U.K., and Europe. Like Holman, Baxter Auto Group is a family-owned enterprise led by Mickey Anderson. Founded in 1957, Baxter is currently the 33rd largest U.S. dealership group and serves communities in Nebraska, Kansas, and Colorado.

“Holman is pleased to be passing Audi Shawnee Mission’s keys to another family-owned company, one whose values, like ours, start with commitment to their community and employees,” said Gene Welsh, President, Retail Automotive for Holman. “With this transaction, we believe we are putting the Audi Shawnee Mission team in a better position for growth with Baxter who operates a number of premier dealerships in the region. We could not be more pleased with Kerrigan Advisors to have found an ideal buyer for Audi Shawnee Mission. Erin and her team kept our strategic objectives at the forefront during every stage of the sale process and shepherded this transaction to a successful outcome.”

“Audi is a growth franchise with a strong product lineup, and it’s particularly strong in the Central Region,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “We continue to see buyers shifting their investments to high growth, less risky franchises, particularly where they can build out a regional footprint in a more meaningful way as Baxter is doing in Kansas City. This transaction is further evidence that the best dealerships in the fastest growing, most business-friendly markets will see robust interest from buyers in 2023,” continued Ryan Kerrigan.

A growth brand, Audi has nearly doubled its US light vehicle market share since 2008; as of September 2022, the brand’s market share in the Central Region was up 2.3% — significantly outperforming its top luxury competitors. The Audi Shawnee Mission dealership is in Johnson County, the most populous and fastest growing county in the state, and where the highest volume top luxury dealerships in the Kansas City are located. The larger Kansas City metro area has grown 19% since 2000, nearly 10% higher than the U.S. and with a thriving economy: more than 46% of households boast annual incomes that are 6% higher than the U.S. average.

Kerrigan Advisors is the most active sell-side advisor on larger transactions in the auto retail industry, achieving the highest sale price per client of any firm over the last five years. The firm attributes its success to its team’s laser-focus on fulfilling each client’s personal and professional goals. In addition to its sell-side advisory work, the firm offers strategic consulting services to dealers and their families, including growth planning, capital raising and valuation analysis, creating value at every stage of the auto retail lifecycle. 

James M. Kearney and Tyler J. Runsten of Stoel Rives LLP served as legal counsel to Holman. Don Erftmier, Jr. of Erftmier Law, LLC served as legal counsel to Baxter.

About Kerrigan Advisors

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers nationwide. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Kerrigan Advisors has represented on some of auto retail’s largest transactions and advised more of the largest dealership groups in the US than any other buy/sell firm in the industry. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, the firm does not take listings, rather they develop a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital raising services, the firm also provides a suite of consulting services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2022 Kerrigan Dealer Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Sale of Southwest Florida’s top volume Chevrolet dealership marks the 14th Kerrigan-led franchise sale in Florida since 2019, making the firm the most active in the state

April 3, 2023 – Incline Village, NV – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented the Winton and Denson families in the sale of Estero Bay Chevrolet to Group 1 Automotive (NYSE: GPI). Estero Bay Chevrolet is the top volume Chevrolet dealership in Southwest Florida, Florida’s second fastest growing region by population growth. With the completion of this transaction, Kerrigan Advisors has successfully advised on the sale of 14 Florida franchises since 2019, making the firm the most active auto dealership sell-side advisor in the state.  

In 2007, Charles Winton and his partner, Pat Denson, were selected by General Motors to open Estero Bay Chevrolet in Southwest Florida, one of the most attractive markets in the US. As a result of their leadership, Estero Bay Chevrolet became one of the highest volume dealerships in the area, winning numerous awards from GM and the industry. In addition to being the dominant Chevrolet dealership in Southwest Florida, Estero Bay Chevrolet ranks sixth in the state and 44th in the nation (top 1.5%) by Chevrolet new unit sales. The dealership has won the highly coveted Chevrolet Dealer of the Year award every year since 2018, an honor bestowed on a select number of Chevrolet dealers nationwide. In addition, Estero Bay Chevrolet is also a Carfax top-rated dealer, recently won Consumer Satisfaction Awards from DealerRater, and boasts one of the highest customer ratings with Kelley Blue Book, Cars.com and Dealer Surveys.

“Representing Charles Winton and Pat Denson in this transaction was a true honor for me and my team. Estero Bay is not only an incredibly valuable dealership, it also represents Charles and Pat’s commitment to excellence and investment in their community. Estero’s success is a product of their honorable character and exceptional leadership of their employees and service to their customers,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “Demand for proven, successful dealerships remains strong nationwide, and Estero Bay Chevrolet is a paragon of success in a premier auto sales region: Florida is the top auto retail market, and one of the most attractive states to do business. Charles and Pat built an incredible legacy of success and community service at Estero Bay Chevrolet, and it was a privilege to advise them on this transaction.”

Estero Bay Chevrolet’s focus on customer service includes a commitment to the communities surrounding the dealership, including Naples, Bonita Springs and Fort Myers. Over the years, the dealership has been a proud donor and supporter of the community, offering scholarships to students in need of financial assistance at Florida Gulf Coast University. Winton, a Foundation Fellow and Chair Emeritus of Florida Gulf Coast University Foundation, helps nurture the growth and education of students through The Charles and Melanie Winton Foundation, while Pat and his wife, Brooke Denson, serve as trustees of SWFL Children’s Charities and leaders of the charity’s annual fundraising event, Southwest Florida Wine and Food Fest, which raises funds to improve pediatric health services in the region.

“At an early age, my wife and I were taught the obligation of giving back,” said Charles Winton, President of Estero Bay Chevrolet. “One of the ways we do that is with our support of Florida Gulf Coast University. We believe that education equals hope and opportunity; our success at Estero Bay Chevrolet has helped to build those opportunities for others,” he said. Pat Denson, Managing Partner of Estero Bay Chevrolet said, “Ever since the first shovel hit dirt on the day we began construction, our focus has been to build and operate a first-class, community-focused operation, including our scholarships to Florida Gulf Coast University, and our commitment to SWFL Children’s Charities.”

Winton began his career as an accountant, spending more than a decade working with dealership financials as a CPA, and learning the retail business from “the top down and bottom up,” ultimately being accepted into the General Motors Minority Dealer Development program. The Charles and Melanie Winton Foundation continues to be active in the greater Fort Myers area along with the greater Charlotte, North Carolina market, where Winton will continue to own and operate South Charlotte Chevrolet and Rock Hill Buick GMC dealerships.

 “We were very happy to be represented by Kerrigan Advisors, a firm that clearly shared – and respected – Pat and I’s commitment to performance and professionalism,” said Winton. “Their deep knowledge of the dealership buy/sell market nationwide, their team’s attention to detail, as well as their expertise in shepherding the sales of many high volume, valuable dealerships like Estero Bay Chevrolet, was key to the success of this transaction. We cannot recommend Kerrigan Advisors enough to dealers who are considering a sale and seek a partner to manage that process from beginning to success.”

Florida dealerships are among the highest volume and most profitable in the nation. Average revenue per dealership in Florida is the highest in the US, as the state’s population and economic growth rates have been some of the highest in the nation. Florida is the fifth fastest growing state by population growth and is the fourth best state in the Tax Foundation’s State Business Tax Climate Index for 2022. The state’s robust population growth, opportune tax climate and higher disposable incomes have led Florida dealerships to be some of the highest volume and most profitable in the nation. Southwest Florida is at the leading edge of this growth: The Cape Coral MSA, which makes up 55% of the Southwest Florida region, is the country’s 12th fastest growing MSA; its population is expected to rise 34% and reach more than 1.05M people by 2045.

“The Estero Bay Chevrolet transaction follows a volume trend we began to track in our Third Quarter 2022 Blue Sky Report®,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “Thanks to economies of scale, high volume dealership benefits from sustainable earnings margins. This means that dealerships like Estero Bay Chevrolet — with a well-run operation and a successful high volume strategy — sell at a price premium. This trend is especially relevant in a business-friendly state like Florida.”

Stephen Dietrich of Holland & Knight served as legal counsel to the seller. Buddy Dearman and Thomas England of FORVIS served as the seller’s accountants. Brian Nolen of Nolen PLLC served as legal counsel to the buyer.

Kerrigan Advisors is the most active sell-side advisor on larger transactions in the auto retail industry, achieving the highest sale price per client of any firm over the last five years. The firm attributes its success to its team’s laser-focus on fulfilling each client’s personal and professional goals. In addition to its sell-side advisory work, the firm offers strategic consulting services to dealers and their families, including growth planning, capital raising and valuation analysis, creating value at every stage of the auto retail lifecycle. 

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2022 Kerrigan Dealer Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

About Kerrigan Advisors

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers nationwide. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Kerrigan Advisors has represented some of auto retail’s largest transactions and advised more of the largest dealership groups in the US than any other buy/sell firm in the industry. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, the firm does not take listings, rather they develop a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital raising services, the firm also provides a suite of consulting services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Sale of five Sacramento dealerships to Canadian-Based Knight Automotive Group marks the 175th dealership transaction led by Kerrigan Advisors since 2015

Incline Village, NV – December 8, 2022 –– Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Lasher Auto Group in its sale of five dealerships: Elk Grove Acura, Audi, Chrysler, Dodge, Jeep, Ram (CDJR), Subaru, and Volkswagen to Knight Automotive Group. The Lasher Auto Group dealerships are among the area’s highest volume dealerships, including Elk Grove CDJR, which is the 3rd and 14th highest volume CDJR dealership in California and the US, respectively, as well as Elk Grove Subaru, the highest volume Subaru dealership in Sacramento based on 2021 new unit sales.

“We were honored to represent Lasher Auto Group on its sale to Knight Automotive Group,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “This transaction is a perfect example of the tremendous value buyers place on high volume, high performing dealership platforms in top growth markets, such as Elk Grove, California. The Lasher Auto Group as one of the highest volume CJDR dealers in the US resulting in a significant price premium due to strong buyer demand despite some of the economic headwinds on the horizon.”

Established in 1955, Lasher Auto Group began when Wes Lasher opened his initial Volkswagen store in Sacramento. In 1972, he opened an Audi dealership, and eventually handed over management to sons Mark and Scott Lasher. In 2003, the family expanded to Elk Grove, a high growth Sacramento suburb and grew the business along with the community. Today, Lasher Auto Group is consolidated in the Elk Grove Auto Mall. The dealerships dominate the Elk Grove auto retail market, with 34% market share of new units sold in 2021. Elk Grove is the second highest volume car market in Sacramento, with approximately 180,000 residents and a population growth rate of 17% since 2010 – 131% faster than the US average.

“We’ve always prioritized our long-standing connection to the thriving Sacramento auto retail market, particularly our customers and employees,” said Lasher Auto Group Co-Owner Scott Lasher. “We are grateful that Kerrigan Advisors identified a private buyer with the same community, customer and employee focus – one committed to growing a group in California and being great stewards of our family’s dealership group going forward.” 

Mark Lasher, Lasher Auto Group Co-Owner added: “Kerrigan Advisors is the premier advisor for dealership groups for a reason. They provide guidance through every phase of the transaction and do so in alignment with their client’s strategic objectives. They ushered this transaction from beginning to a very successful outcome and found an international buyer who appreciated the lucrative financial opportunity the Sacramento auto retail market, particularly in Elk Grove, presents.”

“This transaction reflects a trend we reported on in our second quarter 2022 Blue Sky Report. Specifically, the rise in international dealers coming to the US to acquire dealerships, a reflection of the value these buyers place on our strong franchise laws,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “We believe this trend will continue as the OEMs seek to disrupt the legacy auto retail model, particularly outside the US where franchise protections are weak, and ultimately implement their agency model which could have a negative impact on future franchise values.”

The transaction marks the 171st, 172nd, 173rd, 174th and 175th dealerships sold by Kerrigan Advisors since 2015, bringing the total number of franchise sales they have led in 2022 to 48, and marking their 9th multi-dealership transaction for the year.

Stephen Dietrich, Sarah Seeding and Karl Lott of Holland & Knight served as legal counsel to the seller. David Meyer, Gus Paras and Hen Amir served as legal counsel to the buyer.

About Kerrigan Advisors

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers nationwide. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Kerrigan Advisors has represented on some of auto retail’s largest transactions and advised more of the largest dealership groups in the US than any other buy/sell firm in the industry. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, the firm does not take listings, rather they develop a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital raising services, the firm also provides a suite of consulting services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

A positive outlook by the majority of dealers is tempered by a rising minority who think valuations and profits will decline, according to the recently released 2022 Kerrigan Dealer Survey.

Incline Village, NV – November 7, 2022 – Auto dealers’ optimism about the valuation of their dealerships remains strong headed into 2023, according to the newly-released 2022 Kerrigan Dealer Survey, with a majority expecting record valuations to remain steady or increase over the next 12 months (80%) and just 20% projecting a decline in valuation.   

The survey by Kerrigan Advisors queried over 600 auto dealers about their views on the future value of their businesses, as well as their perspective on franchise valuations and acquisitions. The results show sentiments about the year ahead fall in line with industry consolidation trends, the high level of buy/sell activity, and record valuations, as reported in Kerrigan Advisors’ Second Quarter 2022 Blue Sky Report®. The survey also aligns with the second quarter report’s findings that blue sky values are becoming harder to assess with the impact of rising interest rates beginning to affect public auto retailer valuations and possibly leading to a softening in consumer demand.

“After high expectations shaped by over two years of record-breaking profit increases, dealers today are striking a more moderate stance as compared to last year’s bullish outlook. Although the majority expect profits and valuations to remain the same, or increase, over the next 12 months, a rising minority of dealers have modified their expectations downward for the next 12 months,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “As a result, while we believe transaction activity will remain elevated in 2023 as dealers seek to add scale to their businesses, we also think there is slightly more risk to valuations, and to the buy/sell market, going into next year.”

60% of dealers in the survey expect the value of their dealership/dealership group to stay at today’s record level over the next 12 months, with 20% expecting an increase in valuation, down from 61% in 2021. While only 6% of dealers anticipated a valuation decline last year, 20% now expect a decline in the next twelve months, a 233% increase from 2021. The survey reveals a clear increase in cautiousness by dealers about the future: that 34% of dealers expect higher profits in the next 12 months represents a sharp decline from the 79% that expected profit increases in 2021. Those expecting profits to decline has increased to 25%, from 6% in 2021.

Nevertheless, few (only 2%) are planning to sell any of their dealerships. In fact, nearly half (48%) say they plan to grow their business through the acquisition of one or more dealerships in the next 12 months. “The survey illustrates that a disproportionate number of dealers are planning for growth, rather than exit. This is consistent with what we see in the marketplace. There are still many more buyers than sellers, and we expect this supply/demand imbalance to persist into at least 2023,” continued Erin Kerrigan. “Furthermore, we believe the supply/demand imbalance will sustain current valuations over the next 12 months in keeping with the outlook of most dealers, according to our 2022 survey results.”

The survey also queried dealers on the expected impact of OEM planned changes to the dealer model, specifically in terms of future profitability. With the exception of Ford, the majority of dealers surveyed do not expect OEMs’ changes to negatively impact future profits, though they were decidedly more negative on Cadillac, Chevrolet, Buick GMC, Lincoln, and Volvo. Toyota, the most trusted OEM, once again, had the most positive outlook, with 22% expecting an increase in profits from future changes and just 18% having a negative outlook.

“With the exception of Ford, dealers seem relatively unconcerned by potential OEM changes to the auto retail model at this point,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “For the most part, dealers are skeptical of OEMs’ timelines for electrification and other new retailing concepts. For this reason, we believe dealers have not factored in any dramatic business model adjustments and do not expect a near term impact on dealership profitability.”

Dealers also shared their perspectives on the direction of specific franchise values. Over 40% expect Hyundai (45%), Kia (46%), and Toyota (41%) to increase in value over the next 12 months; this is the first time Hyundai and Kia surpassed Toyota to lead the survey results. Four franchises that had met this criterion in 2021, Honda, Lexus, Porsche, and Subaru, no longer do, with significantly fewer dealers expecting their values to increase. Honda, in particular, saw the largest percentage point decline of any import franchise in the survey as compared to 2021 results, likely due to the brand’s loss of market share in 2022.

Over 90% of dealers surveyed identified BMW, Lexus, Porsche, and Toyota as the franchises least likely to decline in value, significantly fewer than the nine franchises that met this criterion last year. At least 30% of dealers expect to see valuation declines for Acura, Buick GMC, Cadillac, Ford, Infiniti, Lincoln, and Volvo in the next 12 months. 

“While it is worth noting that a minority of dealers in the survey expect a decline in valuation, and fewer dealers – across all franchises – expect values to increase, most dealers remain optimistic about the year ahead and believe their franchises will retain their record valuations into 2023,” continued Ryan Kerrigan. “These results demonstrate the resilience of the dealer business model and the sustainability of elevated profits, even in the face of more negative economic indicators.”

Additional Franchise Valuation Highlights from the 2022 Kerrigan Dealer Survey:

·       Hyundai and Kia surpassed Toyota for the first time to become the franchises most expected to increase in value over the next 12 months – a dramatic 26-percentage point shift since 2019, when just 19% of dealers surveyed projected their valuations to increase. This improvement is consistent with Kerrigan Advisors’ positive outlook for Hyundai and Kia in the Second Quarter Blue Sky Report: blue sky multiples for the franchises have increased 42% since 2020. 

·       Ford saw the largest increase in dealers expecting the franchise to decline in value (18 percentage points) and the biggest drop in the percentage of dealers projecting an increase in value (24 percentage points) compared to 2021. These results are consistent with Kerrigan Advisors’ negative outlook on Ford’s blue sky multiple and dealer concerns about the future profitability of the franchise with electrification. Kerrigan Advisors noted that the firm finds smaller dealers are the most negative on Ford, while larger groups are less negative and, in select cases, positive about Ford’s future.

·       Honda had fewer dealers projecting an increase in value in the next 12 months, coming in second to Ford in terms of the drop in dealers projecting an increase in value compared to 2021. Honda also saw an eight percentage point increase in the number of dealers expecting a decline in value.  

·       Nissan was the only franchise to see an improvement over 2021 results, with an eight percentage point decrease in the number of dealers expecting the franchise to decline in value and no change in the percentage of dealers projecting an increase, retaining the brand’s improved metrics from the 2021 survey. This improvement is consistent with Kerrigan Advisors’ reported improvements in Nissan’s blue sky multiple, up 33% since 2021.

Methodology

The data for The Kerrigan Dealer Survey was gathered from Kerrigan Advisors’ annual survey of auto dealers in conjunction with the issuance of The Blue Sky Report®. The Kerrigan Dealer Survey is based on over 600 responses from franchised auto dealers in Kerrigan Advisors’ proprietary dealer database. Responses were collected from June 2022 to October 2022.

·       To download the full Kerrigan Dealer Survey report, click here.

·       To download a preview of The Blue Sky Report®, published by Kerrigan Advisors, click here. 

·       To access The Kerrigan Index™, click here.

About Kerrigan Advisors

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers nationwide. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Kerrigan Advisors has represented on some of auto retail’s largest transactions and advised on the sale of more top 150 Dealership Groups, than any other buy/sell firm in the industry. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, the firm does not take listings, rather they develop a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital raising services, the firm also provides a suite of consulting services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Sale of eight dealerships to Asbury Automotive Group marks the largest dealership group transaction in Denver’s history

Incline Village, NV – December 7, 2021 – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Stevinson Automotive, the largest privately-owned dealership group based in Denver, Colorado, in the sale of its eight dealerships to Asbury Automotive Group. The transaction includes Porsche Littleton, Lexus of Frederick, Lexus of Lakewood, Stevinson Toyota East, Stevinson Toyota West, Hyundai of Longmont, Stevinson Chevrolet and Stevinson Imports (Jaguar).

Founded in 1962 by Chuck and Pat Stevinson, Stevinson Automotive became a pillar of Denver’s auto retail market, starting with the acquisition of the group’s first Chevrolet dealership in Golden, Colorado, followed by the addition of two Toyota dealerships, as well as a Jaguar and Porsche franchise. The group opened the inaugural Lexus dealership in Colorado in 1989 (one of the first 60 awarded in the US) and a companion Lexus franchise in 2006. In 2011, Stevinson acquired the Hyundai franchise in Longmont, Colorado. 

Stevinson built a long-standing reputation as a dealership group that always put the customer and community first. The group received numerous awards over its 59 years in business including Elite of Lexus (36 times) and Toyota President’s Award (14 times). Kent Stevinson, President of Stevinson Automotive and one of Chuck and Pat Stevinson’s eight sons, served on Lexus’ National Dealer Council and was inducted into the Colorado Business Hall of Fame in 2020, the Colorado Automotive Hall of Fame in 2021, and was Colorado’s nominee for the TIME Quality Dealer Award in 2000. 

“My family built our business on the simple principle of treating every customer as if they were a guest in our home and delivering a little more than expected. For a family business like ours with long-term roots in the Denver community, making the decision to sell, and identifying the right buyer, were critical to me and my brothers.” said Kent Stevinson. “Being in Kerrigan Advisors’ capable hands to lead us through the sale process was priceless. Our sale would not have happened as efficiently, or as smoothly, without the relentless attention to detail and professionalism from Kerrigan Advisors’ team, especially Erin Kerrigan, Marie Brashears and Mercedes Hendricks. For any group considering a sale, I strongly recommend Erin and her team.”

“Kerrigan Advisors was honored to lead the Stevinson sale, knowing how important this transaction was to the family and their legacy in the Denver market. We identified Asbury as the ideal buyer to carry on our client’s record of success and commitment to customer service and employees,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “Stevinson has long been considered one of the most valuable private groups in Colorado. Identifying a buyer who appreciated that value and could complete a transaction of this size was the goal for this transaction. We found that buyer in Asbury.”

“The Denver market is one of the most economically vibrant in the US and an ideal market for strong automotive brands, such as those represented by Stevinson Automotive,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “Dealerships in the Denver area, particularly groups anchored by top franchises such as Porsche, Lexus and Toyota, are in very high demand by major consolidators. In today’s active buy/sell market, it was critical to achieve a closing by the end of 2021. We were pleased to achieve this goal on behalf of the Stevinson family.”

Stephen Dietrich of Holland & Knight served as legal counsel to Stevinson Automotive.

Kerrigan Advisors is the most active sell-side advisor on larger transactions in the auto retail industry, achieving the highest sale price per client of any firm over the last five years. The firm attributes its success to its team’s laser-focus on fulfilling each client’s personal and professional goals. In addition to its sell-side advisory work, the firm offers strategic consulting services to dealers and their families, including growth planning, capital raising and valuation analysis, creating value at every stage of the auto retail lifecycle. 

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2021 Kerrigan Dealer Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

About Kerrigan Advisors

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers nationwide. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Kerrigan Advisors has represented on some of auto retail’s largest transactions and advised more of the largest dealership groups in the US than any other buy/sell firm in the industry. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, the firm does not take listings, rather they develop a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital raising services, the firm also provides a suite of consulting services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723